China is securing energy resources. A potential threat to Europe and U.S. interests.

Preface. China is vastly expanding its fleet of natural gas heavy-duty trucks to 700,000 in 2018 and similar or more amounts after that.  They are building pipelines to Russia and other Central Asian countries to keep the gas coming.  I vote them to be Richard Heinberg’s “Last Nation Standing”. With the Russians second, the U.S. third, and Europe among the many energy resource deprived nations to fall first.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Derrick Jensen, Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report ]

***

House 113-160. May 21, 2014. The development of energy resources in Central Asia. U.S. House of Representatives.

Mr. Rohrabacher. Natural resources including gas and oil are the building blocks of a nation’s economic strength and we all depend on these energy resources to power industry, heat homes, bring us our food and other goodsThe planet’s scarce resources are distributed unevenly around the globe, so history is filled with accounts of nations, states, and businesses engaged in power plays and maneuvers to secure and to move and to utilize and to sequester natural resources.

A contest of resources is playing out right now in Central Asia.

And so this hearing asks the question, what does the future hold for energy resources in Central Asia? To highlight the importance of this topic, it was just announced today that Russia and Communist China agreed on a natural gas deal worth $400 billion. This is a significant development that takes more gas off the market, and of course this gas otherwise might go to supply Europe.

I have been warning about the growing military and economic power of Communist China for years. China has grown to become the world’s largest energy consumer. This makes Central Asia’s oil and gas essential to the Chinese Communist Party and their plans. The Communist Party rules their country with an iron fist and it also threatens their neighbors.

The Communist regime is now actively engaged in expanding its influence beyond its western borders and throughout Central Asia. Their aim is to secure the access to energy resources through long term contracts, investment loans, and building pipelines back to China and perhaps bribes. Make no mistake, these deals favor the corrupt leaders of the Communist Chinese party, it solidifies their grip, and will not necessarily benefit the vast majority of the people of Central Asia. During the last decade, trade between China and the region has increased 30-fold and continues to climb. This is happening as the spectacle of China’s worldwide effort to fence off critical natural resources from the West through bribes and intimidation’s continue. This is quite evident.

 

Mr. KEATING. Today’s hearing topic provides us with an opportunity to examine the global impact of climate change and expanding world population and accompanying social unrest.

In March 2013, for the first time Director of National Intelligence, James Clapper, listed competition and scarcity involving natural resources as a national security threat on a par with global terrorism, cyber war, and nuclear proliferation.

Central Asian states have long been pressured by Russia to yield large portions of their energy wealth to Russia, in part because Russia controls most existing export pipelines. Further, Chinese interest in the region is growing as well. Over the past decade, China has dramatically increased its imports from the region. Today, China imports over half of its gas from Turkmenistan. And last week, the Turkmen President presided over the opening of a new processing plant that will further increase the flow of Turkmen gas to China.

 

DENNIS C. SHEA, CHAIRMAN, U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

Over the last decade, China’s engagement with its Central Asian neighbors has grown significantly. In a region with a long history of Russian control and influence, China is now the most powerful economic actor and is poised eventually to surpass the United States and Russia as Central Asia’s preeminent foreign power.

The Chinese Government is increasing its economic ties with Central Asia particularly in the energy sector for two main strategic reasons. First, Beijing is expanding its energy relationship with Central Asian states as part of a long term energy security strategy designed to diversify the types and sources of energy in an effort to reduce the risk of disruption of supply. Some Chinese policy makers believe this strategy could mitigate China’s so-called Malacca dilemma, or vulnerability to other countries imposing a blockade on Chinese trade at critical maritime chokepoints. However, Chinese growth in oil demand is such that the share of seaborne imports will increase even if all China’s planned overland energy routes are realized. Second, Beijing seeks to promote the security and development of its Xinjiang Autonomous Region. Beijing judges increased economic ties between China’s westernmost region and Central Asia will raise the welfare of the ethnic Uyghurs thereby helping to rein in ethnic unrest in Xinjiang.

Chinese companies own so many projects in Kazakhstan that experts estimate China controls between 25 and 50% of the country’s oil production. Turkmenistan accounts for more than half of China’s natural gas imports, and its future share of imports will likely increase with plans to elevate imports from 20 billion cubic meters per year in 2013 to 65 billion cubic meters by 2016.

Many Central Asian governments welcome China’s increasing economic engagement. Chinese investment, trade deals, and loans have enabled economic growth and development. However, Chinese economic engagement in Central Asia can be a double-edged sword. The region’s overreliance on energy exports to sustain growth can slow the development of competitive industries and democratic institutions. Additionally, at the local level allegations of poor business behavior by Chinese companies have led to protest and violence against Chinese workers and businesses.

The rise of Chinese influence in Central Asia at the expense of Russia coupled with the probable decline in overall U.S. interests in the region after the planned withdrawal of troops from Afghanistan will likely result in a major shift in the balance of power between the major external actors in favor of China.

 

CHARLIE SANTOS, CHAIRMAN, UZBEKISTAN INVESTMENT GROUP, INC.

While we sacrificed more than 3,000 lives and spent more than $1 trillion on a nation-building exercise in Afghanistan, China sought to fill our policy vacuum, focusing on energy and pipelines in Central Asia, taking a page literally out of our policy playbook. So far they have constructed two pipelines, a third to be finished this year, and a fourth expected in 2017.

Our allies in Europe, with even more at stake in pursuing gas resources in countries like Uzbekistan and Turkmenistan, followed the U.S. lead even when it meant losing the possibility of greater energy supply diversification. This has led to greater dependence on Russian gas. With the withdrawal from Afghanistan and growing East-West tensions, 2014 has demonstrated that our disengagement from Central Asia has left the U.S. and its European allies doubly exposed.

Finally, there is no single way to solve Europe’s energy dependency or bring stability to the region, particularly Afghanistan. But ignoring the importance of Central Asia, particularly the key countries that border Afghanistan and forgetting our initial insights about the region will surely make matters worse. When we ignore building broader strategic relationships, as we have during the past 12 years, we make our country and our allies more vulnerable. The confluence of the Afghan withdrawal and growing tension in Europe this year is giving us a chance to refocus our policies to help build a stronger and more independent Central Asia. It is an opportunity we should not squander.

 

DAVID MERKEL, former director, Europe & Eurasia, National Security Council

If we are going to decouple Central Asia from Russia or the growing influence in China, we need to join it up with Europe through Azerbaijan.

We need to have a higher level of engagement in the region. No sitting President has visited the region. Through bilateral and multilateral engagements, the Presidents of China and Russia meet almost on a monthly basis. We shouldn’t try and compete with that, we don’t need to. But if we had a meeting in Baku with the President of Turkmenistan, Uzbekistan, Kazakhstan, and President Aliyev, it would send a clear signal that the United States is supportive not of bypassing Russia, not of punishing anybody, but a very strong message for competition.

 

JEFFREY MANKOFF, deputy director & fellow, Russia & Eurasia program Center for strategic and international studies

The major beneficiary of the struggles that both the United States and Russia have faced in this region has of course been China. And the reasons for China’s success are not hard to grasp. It is a growing market with exponentially expanding energy demand.

China state-owned energy companies do not face the same financial constraints as Western firms. Flush with cash, comparatively insulated from the need to make an immediate return on their investments, they are less sensitive to political and economic risk and more responsive to political direction. China’s emergence into the Central Asian energy game represents both an opportunity and challenge. While the West has talked for two decades about new pipelines, China builds them and is pouring significant amounts of money into Central Asia in the process thereby reducing Russia’s hold on the region’s economies.

The influx of Chinese state-directed investment does not come with the same demands for transparency and rule of law that Western investors seek. This in turn further entrenches Central Asia’s corrupt, patrimonial political systems.

For now, Chinese investment also gives the Central Asian states an alternative to their dependence on Russia. In the future though the danger exists that these states will end up having traded dependence on Moscow for dependence on Beijing. Under the circumstances, U.S. options are somewhat limited.

Please follow and like us:
This entry was posted in Energy Dependence, Energy Policy, Natural Gas and tagged , . Bookmark the permalink.

One Response to China is securing energy resources. A potential threat to Europe and U.S. interests.

  1. D.B. Turton says:

    All this reminds me of the ways that Britain and the U.S.A. claimed much of the world’s resources for themselves over the 19th and 20th centuries – minus the troops and weapons!!!!